We’re still able to make it financially, but extra payments to our credit card debt is going to have to hold on a bit.
We were going along like gangbusters last year paying off debt at a pretty nice clip. We started 2010 owing $23,587.53 in credit card debt. On December 31st, 2010, the balance was $15,541.76. We managed to pay off over $8000 in credit card debt last year, I am really impressed with our accomplishment. I had hoped to see great strides toward our credit card debt this year, but at the moment it looks bleak. Unfortunately, as I’ve mentioned a couple of times in the last few weeks we are having a bit of a money crunch. I know this has been one of the factors in creating some anxiety for me resulting in my post last Friday Prices Are Rising, I’m Starting to Get a Little Freaked Out.
Most months I am able to take $1000 owner’s draw from Mr. A’s business accounts, but business was slow last fall and he had to use his credit card to buy materials and gasoline. Instead of taking the hit in our personal finances, we decided to take our usual draw for a couple of months, hoping business would pick up. Bad move. What we should have done was to take the hit personally and pay the money coming in toward the business credit card debt. As a result, Mr. A hit the credit limit on his credit card and has been struggling ever since to keep enough money coming in to pay for materials and gasoline. We are in a position where every dollar Mr. A makes has to go right back into his business, so that leaves us struggling financially.
I do still have my savings for upcoming bills, like the auto insurance is due at the end of this month. When we found much better auto insurance rates six months ago I continued to save back the higher monthly amount so I have an extra $300 saved. Yay me! But I can’t put that toward our credit card debt because now I need it to make ends meet. And it helped immensely that Mr. A was able to get his tires replaced at no charge as I was able to transfer the money I’d been saving for tires back into our checking account for bills at the beginning of February. It was also good that we were able to get $500 in cash back rewards toward the business credit card. When I applied for those rewards I was informed it would take 8-10 weeks to transact, but in reality it took less than two weeks.
I have thought before about the fact that business finance charges are a business expense… so it is less damaging financially to run a balance on the business credit card, because the finance charges can be considered a business expense! But that’s not how we like to run the business, so we are making a point to pay down the current charges with business income as soon as we possibly can, and let the personal credit card debt accrue more finance charges.
Until Mr. A can get his business credit card paid down so that we can again take a draw from the company we are going to have to cut back on any extraneous spending, which we don’t do much of to begin with, and make payments to the credit cards that are closer to the minimum. I will still attempt to pay $10 or $20 more than the minimum. I am also beginning to make a bit more money from blogging, so I am using as much of that income as I can to make snowball payments toward our debt. Also, in the month of January, readers from this blog started their Amazon shopping using the search box on the left sidebar and I made $28.25 in affiliate links, which will be paid toward our debt as soon as Amazon deposits the amount in my new business checking account. Thank you again to anyone kind enough to use my link to shop through.
So how is 2011 treating you financially so far?